"Mass tort" and Chapter 11 are words that have frequently been used together since Johns-Manville filed for bankruptcy back in 1982. Now, as of April 7, there has been a settlement in principle of many but not all of the asbestos issues remaining in the W.R. Grace asbestos bankruptcy. The "spinners" are all hard at work on characterizing the settlement, and I'm reading with interest to see what others have to say. For now, I'm simply going to note some of the spins and add some small comments.
An April 12, 2008 WSJ editorial merits mention as they declare the settlement a good deal for Grace, with Grace said to have paid $ 2.5 billion on a $ 6 billion demand. More than the numbers, the WSJ praises Grace for having blazed a legal trail:
"By making a solid legal case that bankruptcy courts have an obligation to delve into the legitimacy of tort claims, W.R. Grace has provided a road map to other companies that want to fight dubious suits. The company has also sent a message to the plaintiffs bar that it should expect its handiwork to be examined more closely in future bankruptcy cases."
In my opinion, the praise for trail-blazing is accurate, and the WSJ's kind words are well deserved by Grace's inside and outside lawyers, not to mention management in general.
Monday, April 14, 2008
Mass Tort Claims - Do Shrinking Jobs and Insurance Benefits Increase Propensity to Claim ?
Recent news has been full of stories about rapid general inflation around the world, especially increased food costs leading to protests (and worse) around the globe. Today's news also include an article from the NYT that details soaring co-payment expenses in the US. For a tort lawyer, these articles bring to mind an ongoing tort litigation issue: the propensity to file tort claims.
The tort litigation world includes much argument and posturing regarding propensity to claim. The debate about claiming is made somewhat useless when the two sides cite extreme examples of fraud, which can be either inarguably fraudulent claiming or inarguably fraudulent corporate conduct. What it would be good to see is a meaningful article looking at the propensity to claim as a function of micro economic events, such as manufacturing plant closings, or as a function of the elimination or reduction of medical benefits by a company, especially for retirees. One also wonders of there is meaningful correlation between claiming and macro numbers for inflation of unemployment. Please speak up if you know of any research on these points - I've not seen any.
Until there is research, I'll rely on my personal observation that it seems plain that prospective plaintiffs are often-created when a business closes a plant, completely terminates its retiree medical insurance plans, or insurance benefits are materially reduced. Indeed, when manufacturing plants close, some plaintiff's firms sometimes target the former plant workers as potential plaintiffs, and medical screenings may follow if the plant included use of "toxins." Simply put, otherwise proud and independent retirees who have significant medical issues sometimes say "off the record" that tort litigation is the only means they know of to try to create cash flow sufficient to cover medical expenses. Thus, corporations and governments sometimes may actually be "the cause" behind increased tort claiming. Thinking globally, one would think that global tort claiming will increase as economic changes are harder and harder on the middle class and on those persons already at the bottom of the economic ladder.
The tort litigation world includes much argument and posturing regarding propensity to claim. The debate about claiming is made somewhat useless when the two sides cite extreme examples of fraud, which can be either inarguably fraudulent claiming or inarguably fraudulent corporate conduct. What it would be good to see is a meaningful article looking at the propensity to claim as a function of micro economic events, such as manufacturing plant closings, or as a function of the elimination or reduction of medical benefits by a company, especially for retirees. One also wonders of there is meaningful correlation between claiming and macro numbers for inflation of unemployment. Please speak up if you know of any research on these points - I've not seen any.
Until there is research, I'll rely on my personal observation that it seems plain that prospective plaintiffs are often-created when a business closes a plant, completely terminates its retiree medical insurance plans, or insurance benefits are materially reduced. Indeed, when manufacturing plants close, some plaintiff's firms sometimes target the former plant workers as potential plaintiffs, and medical screenings may follow if the plant included use of "toxins." Simply put, otherwise proud and independent retirees who have significant medical issues sometimes say "off the record" that tort litigation is the only means they know of to try to create cash flow sufficient to cover medical expenses. Thus, corporations and governments sometimes may actually be "the cause" behind increased tort claiming. Thinking globally, one would think that global tort claiming will increase as economic changes are harder and harder on the middle class and on those persons already at the bottom of the economic ladder.
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